Valaris plc (VAL - Free Report) recently announced several new contracts and contract expansions for six of its rigs. The offshore drilling contractor expects the transactions to add $84 million to revenue backlog. Notably, the company — formerly known as EnscoRowan — had $2.4 billion in backlog at the end of second-quarter 2019.
Semi-submersible Valaris 8505 received a contract extension from Italian energy giant Eni S.p.A. (E - Free Report) for three wells offshore Mexico. This contract extension is for an estimated duration of 225 days, ranging from February to September 2020. The company’s jack-up rig, Valaris JU-290 received a contract from Spanish energy company, Repsol, spanning 130 days in offshore Norway. Valaris is required to provide accommodation services at the site starting from September 2019.
The jack-up rig Valaris JU-248 was given a one-month contract extension by Royal Dutch Shell plc (RDS.A - Free Report) offshore Trinidad. The deal is now expected to be completed by October 2019. Moreover, Valaris’ jack-up rig Valaris JU-247 received a contract expansion of eight months from TOTAL S.A. (TOT - Free Report) in the North Sea on the European continental shelf. The contract is now expected to close within November 2020.
The jack-up rig Valaris JU-117 received a contract extension for two wells offshore Trinidad. The company is yet to disclose the name of the award provider. The extension is expected to increase the contract’s duration to February 2020 from December 2019. Finally, the Valaris JU-87 jack-up rig received a new contract from McMoRan Oil & Gas for one well, located in the U.S. Gulf of Mexico. Work for the 30-day contract is expected to start this month.
The contracts highlight Valaris’ solid global footprint, as the assignments are spread across different parts of the world. Notably, the company has presence in almost all major offshore locations in six continents. It has a huge drilling fleet with 16 drillships, 12 semisubmersibles and 54 jack-up rigs.
Markedly, the contracts reflect the resurgence of the offshore drilling market. Even though Brent Crude price is currently hovering around the $60 per barrel mark, significantly lower than what it was in early-2014, offshore projects are again becoming profitable, primarily due to increased cost efficiencies.
The stock has plunged 51.1% in the past three months compared with the 5% decline of the industry it belongs to. Valaris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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